July 24, 2015

New Port in Northern Brazil to Rival Biggest Grain Ports in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Development of the "Northern Arc" of ports in Brazil is starting to make a difference in Brazilian exports. This "Northern Arc" is a series of ports on the Amazon River and in northeastern Brazil that are being developed and/or expanded. As these ports expand their capacity, more of the soybeans and corn produced in central and northern Brazil will be exported via these northern ports instead of the traditional ports in southern Brazil.

The port with the largest potential capacity in northern Brazil is the Port of Itaqui at the city of Sao Luis in the state of Maranhao. This is an Atlantic Ocean port is just south of the mouth of the Amazon River. The TEGRAM Grain Terminal at the port opened for business in March and it has already exported 1.4 million tons of grain in just over four months. This volume of grain exports has already surpassed more than half of the expected export volume for the first year of operation. The name TEGRAM is an acronym in Portuguese for the Maranhao Grain Terminal.

The TEGRAM Grain Terminal has four warehouses with a total storage capacity of 500,000 tons (125,000 tons in each warehouse) which are operated by the companies NovaAgri, Glencore, CGG Trading, and Amaggi/Luis Dreyfus.

This first phase of development cost R$ 600 million and it involves one berth with the capacity to export 5 million tons of grain per year. The second phase is scheduled to be completed in 2017 and it will include a second berth which will double the port's capacity to 10 million tons per year. Once fully operational, the Port of Itaqui will rival the two biggest grain ports in Brazil of Santos and Paranagua.

Currently the port receives 500 to 530 trucks per day and that is expected to increase to 800 per day in the near future. Each of the four warehouses has two dump pits for truck deliveries. By the end of July, a rail connection to the North-South Railroad is expected to be completed allowing rail deliveries to start. When fully operational, the port will have the capacity to receive 900 trains per year (80% of the grain will arrive by rail) and 150,000 trucks per year (20% of the grain will arrive by truck) and they will be able to load 220 vessels per year.

This new port is expected to stimulate the grain production in eastern Mato Grosso, northern Goias, and in northeastern Brazil by reducing the high cost of transportation to export facilities. These areas of Brazil are the fastest expanding agricultural regions of Brazil with much of the expansion fueled by the conversion of degraded pastures to row crop production.